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March 20, 2007
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6301 Antioch Merriam, KS 66202 913-722-6633
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The Kansas Legislature is striving to find the right balance between tax cuts and spending priorities. The Kansas economy has been growing and the State has been collecting more revenues but there are many challenges to adequately fund existing programs and future obligations.
Our economy is built primarily on agriculture, aviation and the oil & gas industry, all of which are susceptible to great economic swings. Several tax cuts were enacted in Kansas in the late 1990's and then the economy hit very tough times with the 9/11 attacks in 2001. Very difficult budget choices had to be made.
Over the past few years, Kansas' lawmakers have relied on issuing bonds for transportation, state building projects and shoring up the retirement fund for state employees. The payments for these bonds will continue for several years. A new three year public education plan was passed last year that mandates increased funding.
Tax reduction proposals have passed the Kansas House of Representatives that would eliminate the corporate franchise tax, reduce corporate income tax rates, eliminate taxation on social security benefits, increase the earned income tax credit for low-income working families and expand the homestead property tax refund. Proponents of these tax cuts insist that lower taxes will generate more economic development in Kansas that in turn will produce more tax receipts for the State.
The Kansas Senate has decided to wait on any major tax cuts for now until the full budget picture is clarified. The Legislature will break on April 3 and return on April 25 for the wrap-up session. On April 16, a new revenue projection for the State for the next 18 months will be developed. This new estimate will be factored in as the budget debate starts up on April 25.
The budget picture in Kansas looks very good for 2008 but less so in 2009 and 2010 as future obligations such as bond payments and higher health costs must be funded. With certain tax cuts a possibility and higher education spending locked in, the future of key social service programs for the disabled, the mentally ill, medical care for children and community services for the elderly will be in serious jeopardy if economic growth does not stay robust. |
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